NB Plans N10.5bn Dividend amid Threats to Earnings
Rising costs and foreign exchange (FX) loss shaped Nigerian Breweries’ earnings performance in the financial year 2022. The brewer’s sales inched upward due to increased price and moderate volume growth with a plan to pay N10.5 billion as final dividend to shareholders.
Nigeria’s top brewer’s audited result showed that the company’s bottom line was weakened by increased costs of sales, and foreign exchange losses while energy costs impacted the operating activities in the year.
Due to its unimpressive earnings performance, its share price declined to N41.50 on Friday in the stock market. However, NB Plc has gained 1.22% from the beginning of the year to date. NP Plc.’s profit after tax inched higher moderately as a result of a favourable tax position in the year amidst pressures in the Nigerian economy.
Despite a cold earnings outrun in the financial year 2022, Nigerian Breweries Plc.’s board of directors has proposed to pay N10.584 billion as a final dividend for the year, the company told Investors in an analysts’ conference call.
Translating to N143 kobo per share, this brings the total divined for the year to ₦13,872,778,710, according to the management. NB Plc paid an interim dividend of N3,288,362,361 in 2022.
For the full year 2022, net revenue grew by 25% driven by brand mix improvements and strong pricing, the company said. The total market decreased by a high single digit reflecting pressure on consumer disposable income as well as naira devaluation and inflation.
Nigerian Breweries said cost of sales, marketing, and distribution expenses were under pressure due mainly to inflation, devaluation of the naira and high energy prices. While the operating Margin was flat, NB’s profit after tax margin was reduced driven mainly by the increase in foreign exchange losses due to the naira devaluation and foreign currency scarcity.
In its audited result, Nigeria Breweries’ earnings per share (EPS) was relatively stable at N1.58 from N1.57 in 2021, driven by the sturdy growth in revenue. Revenue grew by 25.9% to N550.64 billion in 2022 from N437.29 billion amidst rivalry in the brewer market. The revenue surge was supported by higher pricing and solid improvement in the company’s brand mix.
Speaking at an investors’ conference, Nigerian Breweries said the total volume in the period weakened, reflective of the pressure on consumer disposable income amid supply chain challenges.
As revenue growth outpaced increased costs of sales in 2020, Nigerian Breweries’ results showed a surge in gross profit margin, up by 206 basis points to 38.7% in 2022. Operating expenses increased by 31.6%, supported by growth in marketing-related costs which accounted for 82.8% of the total operating expenses.
Net finance costs grew by 93.4% year on year to N34.42 billion, on the back of higher FX losses due to exposure from its foreign currency-denominated payables, according to Cordros Capital. According to its financial scorecard, the brewer recorded a pre-tax profit of N17.34 billion in 2022, which was 26.8% below its previous year’s pretax performance.
Following a more than 62% decline in tax expenses, the company’s profit after tax came at N13.19 billion, 4.1% above N12.67 billion delivered in the comparable year in 2021.
Nigerian Breweries said its group results include the figures of 234 Stores Limited and Benue Bottling Company Limited, a non-functioning subsidiary of the Company. # NB Plc Plans N10.5bn Dividend amid Threats to Earnings